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Idaho’s Projected Robust Job Growth May Challenge Labor Supply

Idaho’s economy has been one of the most dynamic among all the states in recent years. Over the past five years, Idaho has consistently been at the top of the charts in terms of job creation, and only Utah has created jobs as quickly. Recently, the Idaho Department of Labor completed a new round of labor market projections which anticipate that Idaho’s strong rate of job creation will continue into the foreseeable future.

This new analysis forecasts that Idaho’s total employment will reach 840,000 by 2026, up from a 2016 total of about 735,000. This amounts to approximately 105,000 new jobs created in 10 years, which represents a 14.4 percent increase. This indicates that Idaho is expected to substantially outpace the rest of the nation in job creation. Equivalent projections from the federal Bureau of Labor Statistics (BLS) projected total U.S. employment to grow by only 7.7 period in the same time period (1).

This growth projection for Idaho equates to roughly a 1.3 percent expected annual growth rate, which does represent a slight slowdown from recent years. From 2012 to 2017, Idaho averaged 2.5 percent annual growth in total employment. But while these new projections do forecast a slowdown in the rate of job growth, this is not reflective of any perceived weakness in Idaho’s economy. Rather, this expected slowdown is attributed to the fact that Idaho has created so many jobs that the state has used up most of the available labor supply.

In 2012, Idaho had an average of 55,500 unemployed people looking for work. This was a relatively large pool of workers that employers could draw from as the state created jobs. In the Department of Labor’s most recent estimates (for September 2018), the state had only 23,000 unemployed. The unemployment rate, which averaged 7.2 percent in 2012, was estimated at only 2.7 percent in September of this year. So while the fundamentals of Idaho’s economy continue to be very healthy, the rate of job creation is expected to slow down for the simple reason that there likely will not be enough workers to fill all of these new jobs.

These projections anticipate Idaho’s new jobs will be distributed among a wide swathe of industries with no single industry accounting for a disproportionate share of new jobs. Of 14 major economic sectors, Idaho Labor expects 11 to grow at between 1.0 percent and 2.0 percent annually going forward, with one sector (health care and social assistance) expected to grow a bit faster at 2.1 percent annually, and only one sector (mining) is expected to shrink at -0.1 percent annually. Labor analysts also expect private sector employment to substantially outpace government employment. While overall employment is forecast to grow at 1.3 percent annually, these forecasts anticipate that public administration employment will grow at only 0.2 percent per year.

While new job creation is an important component of Idaho’s overall economic health, new jobs are actually not the main driver of hiring activity. In fact, the vast majority of hiring and other activity in the labor market is due to turnover and not new jobs. For example, from August 2017 to August 2018, the United States created approximately 2.4 million new jobs. While this is a very strong and encouraging number, the BLS estimated that in the same 12-month period, U.S. employers made 67 million hires. (2) This means that about 97 percent of hiring activity was in response to turnover, not due to new job creation.

Going forward, turnover rates may be even higher. When the economy is healthy and available workers are in short supply, workers who are already employed may find they have more employment options and become more comfortable moving between jobs.

In Idaho, it is expected turnover will account for most of the activity in the job market. For example, department analysts forecast the state will create roughly 9,200 new jobs in food preparation and serving by 2026, but around 105,000 openings are forecast to be created in these occupations due to turnover. That means close to 92 percent of all the openings in food service will be due to turnover, not new job creation.

Some occupations, however, have lower turnover rates. Health care practitioners, for example, have very low turnover rates – understandable, given the time and expense that goes into becoming sufficiently educated for these jobs. For health care practitioners, therefore, Labor analysts forecast about 8,400 new jobs and 21,600 openings due to turnover. In contrast to food service, where 92 percent of openings are created by turnover, the equivalent rate over 10 years for health care practitioners will be about 72 percent.

Both Idaho and the United States as a whole have experienced a long period of unbroken and sustained job growth in the years following the recession of 2007-2009. High rates of job creation allowed tens of thousands of Idaho’s residents to return to work and have accommodated new residents who have moved to the state to take advantage of Idaho’s high quality of life and dynamic job market. Going forward, it will be difficult for the state to sustain its high rate of job growth for the simple reason that the number of workers available to fill new jobs has dwindled substantially. But the fundamentals of Idaho’s economy remain strong, and there are innumerable reasons to remain highly optimistic about the state’s future.

About Idaho Department of Labor

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